What's it: Trade balance is the difference between the country's export value and its import over a certain period. When exports' value exceeds imports, the country runs a positive trade balance (trade surplus). Meanwhile, if the value of
International Trade
Trade Surplus: Impact on Growth & Currency + Pros, Cons
What's it: A trade surplus is when the value of a country's exports exceeds its imports. In other words, the country reports a positive trade balance. Since international trade involves two different currencies for payment, a surplus also affects the
Infant Industry Argument: Nurturing Domestic Industries (Reasons, Criticisms, Examples)
What's it? The infant industry argument is an economic rationale used in international trade to justify trade protectionism. The idea behind this argument is that a new domestic industry is vulnerable to competition from established players in the
Import Tariffs: Taxes, Types, Impact (Pros & Cons)
What's it: An import tariff is a tax imposed on the price of imported goods. The government usually charges tariffs as a percentage of the price of imported goods. Alternatively, the tariff is levied as a fixed cost for each unit of goods imported,
Trade Protection: Shield Domestic Economy (Reasons, Pros, Cons & Types)
What's it: Trade protection is a government policy used in international trade to limit the flow of exports and imports of goods and services. Protection takes various forms, such as import tariffs, subsidies, quotas, labeling, product safety, and
Import Quota: Protection vs. Price Hikes – Types, Pros and Cons
What's it? An import quota is an import policy that limits the quantity of product imports over a certain period. The government implemented it to protect domestic industries that were vulnerable to pressure from imported products. It is also
Trade Restriction: Impact on Consumers & Businesses (Reasons, Types)
What's is: Trade restriction refers to the various barriers that make the flow of goods and services between countries immobile. If the barriers come from government policies, we call it trade protection.Trade restrictions affect the demand
International Trade: Your Guide to the Global Economy
International trade fuels the global economy, driving the exchange of goods and services across borders. It plays a critical role in our daily lives, from the smartphone in your pocket to the clothes on your back. But how exactly does international
Trade Barriers Explained: Types, Why They Exist – Impacts on Economy, Consumers, Business
A trade barrier is any obstacle that limits the movement of trade flows between countries. Generally, this measure protects the domestic economy.There are various kinds of trade barriers, including tariffs, quotas, embargoes, sanctions, and
Trade Deficit: Exploring Causes & Impacts + Pros, Cons
What's is: A trade deficit occurs when the value of a country's exports is less than its imports. To finance the deficit, the country has to borrow from foreigners or sell assets (through investment inflows in the capital market, for example).
Division of Labor: Efficiency Engine (Specialization, Productivity)
What's it: Division of labor means dividing the work required to produce a product into different and interdependent tasks. The company breaks down a complex production system into several units. They then assign tasks and workers to each unit.
Absolute Advantage: Understand Why Countries Trade + Assumptions, Criticism
What's it: Absolute advantage refers to the ability to produce goods or services more efficiently than others. As a result, those with this advantage can produce at a lower absolute cost.Absolute advantage is important for explaining why